Project Identification: BPM and Business Needs

Project Identification and Initiation

• A project starts when an organization identifies a business need that can be addressed by building a system.
• Examples of business needs include a new type of customer or poor customer service levels.
• Needs can also come from identifying innovative and competitive IT uses.
• Emerging technologies such as cloud computing, RFID, and Web 2.0 can be leveraged.

Business Process Management (BPM)

• IS projects often arise from BPM.
• BPM is a methodology where organizations continuously improve end-to-end business processes, with a strong focus on customer view concentration.

Business Process Types

• Business Process Automation (BPA) uses technology to support or replace manual processes.
• Business Process Improvement (BPI) creates redesigned processes that improve workflows using new technologies.
• Business Process Reengineering (BPR) involves completely changing business processes.

Role of Business Analysts in BPM

• Business analysts define and map business process steps.
• They create ways to improve process steps that add value.
• They eliminate or consolidate steps that do not add value.
• They create and adjust electronic workflows to improve existing process maps.

Project Sponsor

• The project sponsor is a person or group interested in the system's success.
• The project sponsor ensures the project is on the right track throughout the SDLC from the business perspective.
• The project sponsor is the primary contact for the project team.
• Project size/scope dictates the type of sponsor involved.

Business value, cont'd

• The project sponsor determines the business value gained from the system.
• Tangible business value is easily quantified and measured, for example, reduction in operating costs.
• Intangible value comes from believing the system provides unmeasurable, but important, benefits.

System Request

• A System Request is a document outlining the business reasons and expected value/benefits of a new system.
• Usually, the project sponsor completes this form during system selection.
• System requests include: project sponsor, business need, business requirements, business value, and special issues.

What to include in a System Request

• Project Sponsor: The person starting the project and serving as the main contact.
• Business Need: The business-related reason for starting the system.
• Business Requirements: The business capabilities that the system will provide.
• Business Value: The benefits the system will create for the organization.
• Special Issues or Constraints: Issues relevant to the implementation that need to be known by the approval committee.

System Request Flow

• Completed system requests go to an approval committee for review and consideration.
• The committee reviews and decides whether to investigate the project.
• The next step if approved for investigation, is to conduct a feasibility analysis.

Feasibility Analysis

• Feasibility analysis helps determine if an organization should proceed with a project.
• It also identifies important risks that need managing if the project is approved.
• Technical, economic, and organizational are common assessment points.
• These results form a feasibility study deliverable submitted to the approval committee during project initiation.

Technical Feasibility

• Technical feasibility assesses if the current IT can successfully design, develop, and install the system.
• Technical feasibility is like a technical risk analysis, determining if "Can we build it?"

Technical Feasibility, Risks

• Risks can affect project completion.
• Users' and analysts' familiarity with the application.
• Familiarity with the technology used (solving problems and delays with new technology).
• Project size (complicated to manage and important requirements can be missed).
• Compatibility of new system with current technology.

Economic Feasibility

• Economic feasibility, or cost-benefit analysis, identifies system costs and benefits.
• It helps answer the question: "Should we build the system?"

Cash Flow Analysis and Measures

• IT projects often require an initial investment, but in turn they provide a stream of benefits over time, while having ongoing support costs.
• Cash flows include inflows and outflows, which are estimated over a defined future period.

Common Methods for Evaluating Projects

• Return on Investment (ROI)
• Break-Even Point (BEP)
• Discounted case flows are used to compare the present value of all cash inflows and outflows for the project in the today's dollar terms
• Net present value (NPV): the difference between the total PV of the benefits and

Steps to Economic Feasibility

• First, identify costs and benefits.
• Then, assign values to those costs and benefits.
• Determine cash flow.
• Finally, assess project's economic value using ROI, BEP, and NPV.

Identifying Costs and Benefits

• Development costs
• Operational costs
• Tangible benefits
• Intangibles

Assigning Values to Costs and Benefits

• Rely on people familiar with the business.
• Consider past projects.
• For predictions, estimate a range of values and assign a probability value to each cost & benefit value.
• Quantify intangible costs & benefits.

Determine Cash Flow

• A formal cost-benefit analysis contains costs and benefits over a selected number or years to show cash flow over time (generally, three to five years).
• Determine ROI.
• Determine BEP.
• Determine NPV.

Organizational Feasibility

• How well will users accept the system and incorporate it into ongoing operations?
• Organizational feasibility can be the most difficult feasibility to assess.
• One of assessing organizational feasibility is how aligned the project goals are with the business goals.
• A second way to assess organizational feasibility is to conduct stakeholder analysis.
• A stakeholder is a person, group, or organization that can affect a new system.
• Project champion (aka project sponsor) provides time and resources.
• System users meet them once &they disappear
• Organizational management ensures to make sure others believe the new system has value.